ON THE METHOD AND MODEL OF ENERGY ENTERPRISE …

1 Journal of Theoretical and Applied Information Technology 10th February 2013. Vol. 48 2005 - 2013 JATIT & LLS. All rights reserved. ISSN: 1992-8645 E-ISSN: 1817-3195 612 ON THE METHOD AND MODEL OF ENERGY ENTERPRISE project portfolio SELECTION AND optimal allocation OF RESOURCES WU YUNNA1, CHEN JIAN2 AND LIU CHAO3,WANG HEPING4 1 Economics and management , North China Electric Power University Beijing, China 2 Economics and management , North China Electric Power University Beijing, China 3 Economics and management , North China Electric Power University Beijing, China E-mail: ABSTRACT With a series of new ENERGY construction projects of China in full swing, such as 10 million kilowatt wind power base, solar photovoltaic power generation clean ENERGY base, the new rural biomass ENERGY projects and nuclear power development and construction projects, the major power generation groups, as well as the investors represented by private capital, take this opportunity to have entered the field of new ENERGY construction.

2 The number of new ENERGY projects increases, each investor is bound to be faced with the problems of portfolio and investment decisions of Item sets, as well as the problems of allocation of resources and optimized combination of multiple projects in the process of building at the same time. Traditional single- project management includes the management content such as project scope, time, cost, quality, risks and so on, while project portfolio management exceeds the boundaries of the traditional project management and combines the project implementation and business strategy as a bridge between corporate projects and strategies. From the view of project portfolio selection, optimal assessment, resource optimization and so on, the article introduced the methods and models of the major aspects of the portfolio management of the new ENERGY projects. Keywords: Corporate Strategy, project portfolio Selection, optimal Assessment, optimal allocation Of Resources 1.

3 INTRODUCTION Faced with fierce competition of the new ENERGY market, developing multiple projects or item sets at the same time is the inevitable choice for ENERGY enterprises to expand the scale and improve competitiveness. At present, the management mode of the ENERGY enterprises for new ENERGY power projects remains in the traditional single- project management mode[1]. Problems such as fragmentation, resources exclusion and information not sharing among various ENERGY projects generally exist. Single- project management takes a bottom-up management style, that is to collect new ENERGY project information from the bottom of the project , and send the information to the senior project management to analyze, and then manage and control projects. This way is unable to find projects that deviate from the business goals or go beyond ENTERPRISE implementation and control capability.

4 This management MODEL makes ENTERPRISE project management exist the following drawbacks: Proj ect deci si ons relationship between projects and strategic objectives enterprises that should achieve from a strategic level; E nterpri ses l ack evaluation criteria and METHOD for project investment evaluation and selection, project decision-making almost makes subjective project decisions; E nterpri ses pay too m uch attention to short-term gains of single ENERGY projects, while ignoring the dynamic relationships and long-term value of projects; Si ngl e proj ect m based on distributed projects ignores the systematic principle, and lacks unified resource management and allocation for all new ENERGY projects within the ENTERPRISE -wide, which often results in conflict and controversy among multiple projects for access to critical resources, also results in the waste of human, financial, information and other resources.

5 Journal of Theoretical and Applied Information Technology 10th February 2013. Vol. 48 2005 - 2013 JATIT & LLS. All rights reserved. ISSN: 1992-8645 E-ISSN: 1817-3195 613 Development and construction of multiple projects or item sets is no longer a simple and repetitive single- project management , but the deployment of corporate strategy[2]. Multi- project management not only manages each project in accordance with the traditional project management MODEL to ensure the realization of all project objectives, but also makes a unified management for these development projects under the premise of corporate strategy to ensure the smooth completion of all projects, thus achieving the strategic objectives of the ENTERPRISE [3]. Therefore, how to make scientific planning, scientific combination and scientific decision, and how to rationally optimize resource allocation under the premise of limited resources become the strategic research topics that ENERGY companies must face.

6 2. portfolio SELECTION PROCESS AND METHODS In new ENERGY power companies, the resources required by candidate projects are always more than what the business can provide with, different power projects must compete for limited resources. As an ENTERPRISE , it must face with a number of projects to make a choice, and make optimized combination of resources in accordance with them, so as to make utilization optimization and ultimately maximize the return. Taking the characteristics, competitive environment and market conditions of the new ENERGY electricity industry into account, variously analyze each alternative project to determine whether they are necessary and feasible, and thus make optimized combination of viable projects based on organizational resources, on the basis of surveys and studies[4]. Therefore, the portfolio selection process of new ENERGY power is divided into three stages: forming alternate item set; single- project evaluation; project portfolio selection, as shown in Figure 1.

7 First stage: forming alternate item set In this stage, we mainly collect new ENERGY projects, establish a set of alternative projects, and improve all aspects of the project data through good project generation mechanisms. There are three sources of project in new ENERGY enterprises. They are projects derived from corporate strategy, projects generated from business operations process and staff proposed projects. Therefore, in this stage, we must first ensure that the new ENERGY companies have established clear strategic goals and vision; Secondly, we must establish a good project generation mechanism, through which we can get a large number of projects with great value not only from corporate strategy, but also from business operations and staff suggestion. In addition, the optimal assessment of the project portfolio is conducted on the basis of a complete project data, therefore, when we establish a set of projects, we must collect and collate all aspects of data of new ENERGY power projects, so that be prepared for the evaluation, optimization and combination of projects in the next phase.

8 The new ENERGY power project data to be collected includes the goal benefits, overhead costs, human resource needs and risk factors of the project [5]. The project data can be presented on the form of project application report, the project feasibility report and so on. BeginingData of new ENERGY power projectsScreening for new ENERGY power projectsAlternative new ENERGY power project setsProject evaluationProject portfolio selectionNew ENERGY power project portfolioStopCorporate strategic projectsCorporate operation projectsStaff proposed projectsProject applicationreportProject feasibility reportResource allocationNew ENERGY power project evaluation index systemNew ENERGY power project portfolio selection MODEL Fig. 1 A New ENERGY Power project portfolio Selection Process Journal of Theoretical and Applied Information Technology 10th February 2013. Vol. 48 2005 - 2013 JATIT & LLS. All rights reserved. ISSN: 1992-8645 E-ISSN: 1817-3195 614 Second stage: evaluation of single- project Through the collation and analysis of all aspects of project data collected in the first stage, we should build a project evaluation system from the perspective of individual projects, and select the appropriate project evaluation METHOD to evaluate and screen the project , then eliminate the project that does not meet the basic measures.

9 For example, we can establish the evaluation index system from the perspective of organizational strategy. The indicator system can reflect the coincidence degree between project goals and strategy goals, and the contribution degree for realizing corporate strategy objectives. And then we should evaluate and screen the projects with some evaluation methods, and terminate the projects which are inconsistent with the corporate strategy. Another example is to establish the evaluation index system of projects to evaluate and screen projects from financial benefits, technical feasibility and risks, such as what is shown in Figure 2. New ENERGY power projectevaluation and selectioncriteriaEffects of new ENERGY projectson regionaleconomyUrgency of new ENERGY projects Risk of new ENERGY projects implementEffect of new ENERGY projects to development of organizationsReturn of new ENERGY projects to organizationsRegional people s living standardsRegional populationRegional employment rateImpact on regional environmentImpact on regional taxFinancial returnsImprove production efficiencyImprove organization s ENERGY supply capacityIncreased users satisfactionExpand the range of organizations in the marketConsistency with the development of new ENERGY strategyImprovement of ENERGY developing technologyPopularity of organizations in the usersManagement capabilities increaseEnhance competitivenessTechnical risks of development of new ENERGY projectsEnergy market riskResource supply risksThe risk of environmental policyPressure of international ENERGY situation Domestic

10 Pressure for development of ENERGY projects Fig. 2 Comprehensive Evaluation Index Systems Of New ENERGY Power Projects Third stage: evaluation and selection of projects New ENERGY power project portfolio management not just manages projects, but also is the key to Journal of Theoretical and Applied Information Technology 10th February 2013. Vol. 48 2005 - 2013 JATIT & LLS. All rights reserved. ISSN: 1992-8645 E-ISSN: 1817-3195 615 choose new ENERGY power projects. Optimizing, selecting, and evaluating for numerous new ENERGY projects, and determining the priority of the projects is not only the key work of project portfolio management , but also the basis of portfolio management . After the assessment on single new ENERGY project , we need to select the qualified projects, combine them with the portfolio of projects in the previous cycle, and enter into the phase of project portfolio management .